A Simple Moving Average (SMA) is the average of the previous n closing stock prices. For example, a 20-day SMA of a stock is the average of its closing prices over the past 20 days. While a SMA is unable to predict new market trends, it is capable of confirming trends that have already been established. The period of the SMA selected usually depends on the desired time horizon - 20 for short term, and 200 for long term observations.

Note: The tool is more relevant for analysing individual stocks or stock indices, but are of lesser relevance with respect to funds' NAV. Investors are advised to exercise caution and moderation in using them for investment decisions.